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Nancy Starczyk: Insurance rates may roll back

Posted: March 12, 2014 2:00 a.m.
Updated: March 12, 2014 2:00 a.m.

 

The likelihood that devastating increases in flood insurance rates will be reversed improved dramatically with passage of a reform measure on March 4 in the U.S. House of Representatives on a surprisingly bipartisan vote.

The House voted overwhelmingly to roll back flood insurance rate increases that Realtors estimated had delayed or killed 40,000 home sales nationwide after just four months of implementation.

The rate hike hit Florida the hardest, but also impacted California coastal properties and inland homes and condominium complexes located in flood zones adjoining lakes, creeks and local rivers.
Rep. Maxine Waters, D-Los Angeles, with a bipartisan coalition of coastal-state lawmakers, brokered the rate reversal, which sailed through the House on a vote of 306 to 91, despite protests from conservatives that the changes would add to the national debt.

However, the legislation still must win Senate approval, which passed its own bipartisan bill this year that had little chance of success in the House because it would have added $2.1 billion to the deficit over a decade.

The Senate bill simply delayed the increases for four years while the Federal Emergency Management Agency studied the issue.
The House compromise would roll back some rates, repeal FEMA’s authority to increase premium rates at time of sale or issuance of a new flood map, refund excessive premiums, and allow more modest rate increases of 5 percent a year, with a cap of 18 percent a year on primary residences.

To avoid raising the deficit, the House bill would impose a $25 fee on each household and $250 on businesses and second homes.

Realtors strongly supported passage of the House measure and urge quick action by the Senate.
Flood insurance rates started skyrocketing last year after new provisions went into effect as part of an earlier overhaul of the National Flood Insurance Program that was signed into law in 2012.

That earlier effort sought to push up flood insurance rates to more accurately reflect risk and cover a deficit in the flood insurance program.

Nancy Starczyk is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

 

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